City Council Finance Committee Chair Aaron Bowman says he will wait to examine findings from the Council Auditor before deciding whether to defer a bill increasing pension protections for JEA employees.
The pension plan adjustment is one of several minimum requirements JEA senior staff set for prospective buyers as the public utility explores a sale or privatization.
Ordinance 2019-566 amends the city’s general employee pension plan specific to JEA employee retirement benefits, aiming to provide some guarantees if voters approve a sale.
Council President Scott Wilson suggested during the Council agenda meeting Tuesday that a deferral might be necessary pending an analysis from the Council Auditor on the plan’s ability to cover JEA’s future unfunded liability.
Bowman said the auditor’s team completed the analysis Wednesday, but there could be questions that need to be resolved before taking up the bill. A public records request for the finding submitted to the city Thursday morning was not immediately fulfilled.
“If our auditors aren’t ready to give us a position, I’m not ready to move that bill. But I’m encouraged we may not be in that position,” Bowman said Thursday.
Wilson’s biggest concern is how JEA officials will calculate the pension’s future solvency. If the city sells JEA, the bill requires the utility to make a lump sum contribution to the pension plan within 14 days of completing the transaction. The ordinance states the additional contribution will be calculated as “an amount necessary to maintain the plan’s level of unfunded” liability before the sale.
“There is some concern about the dollar amount in the bill that covers JEA’s pensions going forward, whether that’s enough money,” Wilson said.
Wilson said Wednesday it is difficult to determine the value of future JEA pension benefits, and he’s leaning on feedback from the Council Auditor before members vote on the proposal.
The bill is expected at the Sept. 4 Finance Committee meeting.
Council ‘needs more time’
Wilson said the decision to privatize JEA is making its way to Council faster than he anticipated.
“I just think the Council as a whole needs more time. This is one of the biggest transactions we’ve ever undertaken, even though this is just a small part of it,” Wilson said.
The bill states that active JEA employees on the date of a “recapitalization event” will be considered vested in the pension program regardless of their years of credited service.
JEA employees with at least five years of service can remain in the General Employees Defined Contribution plan or can switch to the pension plan and put their balance toward the pension.
Those hired after Oct. 1, 2017, would become vested members of the defined contribution plan. Employees who came on before that date can remain in the direct contribution plan and be 100% vested in the employer contribution or can switch to the pension.
All pension participants would be advanced to five years of service under the bill, and would begin receiving pension income at age 65. They also could receive a refund of their employee contributions, plus JEA would match the employee’s contributions.
On Aug. 2, JEA senior staff released an Invitation to Negotiate with an outside organization for a possible sale.
The ITN includes other requirements for buyers — a minimum payment of $3 billion in cash to the city from a buyer, $400 million in customer rebates, and a commitment to a new headquarters and keeping employees in Downtown Jacksonville, among other stipulations.
Mayor Lenny Curry has proposed using proceeds of the utility’s sale to pay off the city’s $2.2 billion debt.
Companies interested in buying JEA have to submit their proposals by Sept. 30, and JEA officials are expected to begin negotiations with a staff-recommended bidder by Oct. 15.
Any sale of more than 10% of JEA’s assets will have to be approved by the City Council and through a voter referendum.
‘Cone of silence’
Council members and other city leaders may not be able to publicly discuss the merits of selling JEA beyond the pension bill discussion.
Council, Curry and the JEA board were placed under a “cone of silence” since the Aug. 2 ITN announcement.
A memorandum from the Office of General Counsel distributed Tuesday to Council officials states any possible decision-maker in a JEA sale is prohibited from speaking about the terms of JEA’s ITN with constituents, members of the media, on social media or with possible respondents to JEA’s solicitation.
The cone also means Council members cannot file legislation or hold noticed public meetings regarding the solicitation terms.
The guidance does allow city and JEA leaders to speak about JEA’s future “in general.”
Deputy General Counsel Lawsikia J. Hodges told the Council during Tuesday’s agenda meeting that the guidelines are to maintain transparency and a level playing field for bidders during the procurement process. She said the cone also applies to companies and organizations planning to submit a proposal.
After reading the memo, Council members Randy DeFoor and Garrett Dennis said the fine line between specific and general comments could provide a need for the Council to have outside legal advice. They also requested city General Counsel Jason Gabriel provide a binding legal opinion on the cone restrictions.
“We have not talked about this at all as a Council,” DeFoor said. “This is a complicated area that we need our own expert counsel on to hold our hand through the process. The general counsel wears a lot of hats. They represent a lot of different people, and we’re going to need our own, in my opinion, counsel.”
DeFoor went further and expressed her reservations about a possible JEA sale — emphasizing the utility’s water business.
“I am concerned about the fact that we are selling our water source. That’s part of this process. No one does that. Every city I’m aware of controls their water source — every city.”
When asked, Hodges told Council member Ron Salem that comments by Florida Power & Light Co. Co. CEO Eric Silagy to reporters Aug. 15 that the Juno Beach-based NextEra Energy Inc. subsidiary was considering a bid to buy JEA did not go outside the cone guidelines.